It’s the New Year Financial Kickoff…
In this edition of Ask April, I will help you launch your financial year and set you on a path toward your goals.
I’ll cover:
Setting your financial aspirations for 2024
Building this year’s spending plan
Debt paydown strategies
Why your investments should align with your dreams
And more
Mentioned in this episode:
Transcript
April Schoen: Hello, everyone. Welcome to a special episode as we kick off the new year. So Happy New Year. I'm so thrilled and glad that you're here. This is going to be another episode of our Ask April segment of our podcast, the New Year financial kickoff. So before we dive into the exciting stuff, let's take a quick look back and what were some of your key takeaways from our year end review? So at the end of last year, we had a podcast episode thinking about what are some of those things that we should be looking at, at the end of the year, like at the end of your financial checklist.
And today, we're gonna be talking about kick starting the new year, and kick starting your new financial plan. So let's talk about intentions. So have you ever heard this saying, where focus goes, energy flows? Well, I want you to think about that as we're going into 2024 when it comes to your finances. So where your focus goes, energy flows. And intentions are like our financial GPS, guiding us to what truly matters. They really set the tone for our financial journey.
So I'm going to share with you a little bit about my personal journey, and kind of what my intentions are for this year. And I'd love for you to share with us about what are some of your financial aspirations for 2024. So grab a piece of paper, grab a pen, or your favorite note taking app, and let's take some time to set our financial intentions. I want you to take a few minutes, and I want you to reflect on what is it that you want to achieve this year so that we can make this year as remarkable together as possible.
Now in the last podcast about the year end checklist, I asked a question and said if you don't know what your goals are, answer this question, and they will help you. So I want to do the same thing. But let's break it down into smaller manageable goals. So here's the question. If we're sitting here together at the end of 2024, and we're looking back over the year, and we're celebrating all the success that you've had in your financial journey, what are those things that we're celebrating?
So if we fast forwarded and we got to the end of 2024, and you're looking back over the year, what do you feel like will have had to happen for you to feel like it was a successful year, when it comes to your finances? And whatever came up for you just then, I want you to jot those things down. Sometimes what I find is very helpful to do is to do a brain dump and just write down over the next year, what are all the things that I want to accomplish? And I just start writing them all down. On a piece of paper, I have a journal or my notebooks. And I really do I like pen and paper, right? So get it all down.
What are all those things that you want to accomplish? And then you can go back and look at that list. And you can prioritize it and figure out what's going to be most important to you. So let me give you some examples. What if you wanted to pay down debt. Maybe you've got your student loans or credit cards or car loans, so maybe you want to get that stuff paid off. Maybe you want to make sure that you are saving more this year than you did last year. Maybe you want to be giving more this year than you gave last year. Maybe you're really close to retirement and you're thinking this is the year I need to get my ducks in a row right? I need to make sure my i's are dotted and my t's are crossed.
I need to have that financial plan for what is life gonna look like for me financially when I step off into retirement. Maybe you want to set up your kids or your grandkids for college. And so you want to talk about education planning. Maybe you want to think about tax planning because man you got hit last year with some unexpected taxes that were due. You want to make sure that doesn't happen again. Whatever that looks like for you, jot it down. And I encourage you to work on that throughout this year. And if you need some help with it, reach out to our office, set up a time for a call so that we can make sure that you've got a good plan going into 2024 and you know exactly what you need to be working on.
So as we're thinking about these key financial resolutions, let me give you some other ideas. I would highly suggest you start with looking at your budget for 2024. Now, again, I do not like the term budget, I think it's like a dirty four letter word, it kind of reminds me of a diet, it feels very restrictive. So I like the idea of having a spending plan. And why is this so crucial? A well tailored spending plan is kind of like a financial superhero. And it really just helps put you on the right path.
I meet with so many clients when they first come to me, and we talk about this and I ask if they have a budget or a spending plan. And they tell me, no, they don't. They just kind of spend money. And they don't feel like they have to really restrict themselves too much. But they're not quite sure where their money's going. And if we're not quite sure where our money's going, then we don't really have intentions, we may not have priorities around it. And sometimes there is this feeling of I don't know where it all goes. And feels like money comes in the front door and goes out the back door as quickly.
Or I have clients who make a good income. And they tell me they feel like they're living paycheck to paycheck. And it's because they don't really have a grasp on where their money's going. So that's where a spending plan comes in. With a spending plan, I want you to be intentional, and really thinking about where is it that you want your money going? And how do you want to spend your money? And when we're thinking about a spending plan, I want to make sure that you're including the fun things. The thing that I see where people make the most mistakes when it comes to a budget or a spending plan is that they make it too restrictive, to where there's no wiggle room. And it's not reality, it's not real life.
So I'll give you an example. My husband and I like to go golfing together. Now we don't golf all the time. I mean, if we could go once a month, I would be happy with that. You got to remember, we've got two kids that are ages seven and 10. So it's not very often that we get to go out and do that. But we do like golfing. And we actually like golfing as a family, the four of us. So what good does it do for me to create a spending plan that doesn't allow us to do things like go golfing together. Have a date night. Buy clothes for the kids. Save for retirement. Whatever that looks like.
It's not going to do me any good at all because it's not real life. It's not realistic, there's no way I'm going to stick to it. So it's kind of like having that diet where the diet is so restrictive that you can enjoy food. Then you're like, well, I already blew it, I might as well just throw that diet out the window, because I'm not gonna stick to it. So we gotta make it more realistic. And I'd actually even rather sometimes when I'm talking with clients, and we're talking about saving money, we're talking about paying down debt, again, they've become too aggressive. I can save this amount. I can put this amount towards the debt to get it paid off as fast as possible.
But if you can't stick to it, then it's actually a demotivator for you. So on some of those things, I'd actually rather us like slow down and take more time to get there if that means that it's more obtainable for you. Now, as we're going through, we're thinking about having this spending plan. The next thing that I want you to do is look at your emergency fund. Your emergency fund is really the unsung hero of your financial stability. It's the moat around your castle, it's your first line of defense in case something happens, where you need to have cashed it to get your hands on it.
So what we recommend is we recommend that you have six months of expenses readily available in savings. So after you've done your spending plan, and you now know what your monthly expenses are, now you can figure out well how much do I need to have in my emergency fund. It's easy, you need six months of expenses in your emergency fund. So make sure that your emergency fund is fully funded. And if it's not, then I suggest that you make that your first goal. Put that one at the very very tippy top of your list of the things that you're going to accomplish first is going to be having that emergency fund.
Another thing to think about as we're going into the new year is managing debt. Okay, so debt can be challenging, but you can conquer it. Okay, I help clients figure out debt pay down strategies. So let's make this year, let's make 2024 the year that we get to have that financial freedom by not having debt, right. So put that in a plan, you can have a debt pay down plan. And that could be if you've got student loans, credit cards, car loan debt. We really want to have a plan for how to pay down debt efficiently and effectively.
One of the areas where I see when it comes to debt, that the mistake that I see most often is people are trying to pay down everything at once. So let me give you some examples. I met with a client recently, and they had a car loan, they had a personal loan for some repairs at the house, and they had some credit cards. So they kind of have like three different categories of debt. And they didn't feel like they're making a lot of progress, because what they were doing is they're paying extra on every single one.
So let's imagine they've got like four different debts. The car, the personal loan, and two credit cards, and they're paying extra on every single one of those to try to get them paid off. And so we talked through it. I said it's actually a more efficient way for them to accomplish these goals, their goals, is actually just tackle one at a time. So pick one, and put every spare penny that you can towards that loan to get it paid off. And then when you move on to the next debt, you take the minimum payment from the one that you just paid off, and you add that to the next one. And that's what we call the debt snowball.
So when I look at debt pay down strategies for clients, what we want to look at is we want to rank our debt by both balances and interest rates. And sometimes it makes the most sense to tackle the debt that has the smallest balance, so we can get it paid off as quick as possible. Sometimes it makes more sense to attack the one that has the largest interest rate, because it's harder to pay that one off, because it has a higher interest rate. So you know, I suggest you just look at it from those two angles, balances and interest rates to determine which one should you pay off first.
The next thing you want to do is you want to make sure that you're investing for your goals. I want you think back about what we talked about setting intentions for the year, and setting goals for the year for our future, and let's make sure that we're saving for that. Your investments should align with your dreams. Your investments should align with your short term goals and your long term goals so that your money is actually working for you. I'm a big believer and having a bucket strategy. Meaning that we have different buckets for different purposes.
So we've got those short term goals, those intermediate goals, those long term goals, and we've got different accounts set up for different reasons. And those are invested according to those goals. So your emergency fund, guess what, you don't want to have that invested. Don't invest your emergency fund. You want to have that be in cash and cash equivalents. That's like your short term reserves. If we have more intermediate funds, thinking about something that we've got that we want to, we may need it to tap into three, five years from now, we'll then have it invested appropriately for that goal.
The same thing for retirement funds. Thinking about something that's long term. If something's 20 years away, then we want to be invested properly for that. I met with some clients recently in their 40s and we went through and looking at their investments, and they had too much of their retirement accounts in cash. Especially considering their ages and their time horizon. So make sure that your investments are aligned properly. The opposite could also be true. If you're a few years from retirement, then you want to make sure that you're not invested too aggressively.
If you're a few years, if you're five years from retirement, you're in what we call the retirement redzone, which is the five years before retirement and the five years after retirement. And those 10 years are the most crucial when it comes to your investments. So you don't want to make a mistake with that. You want to make sure that they're invested properly for you. And again, this is when we want to review and adjust our goals, because goals can change, and that's perfectly fine. So let's take a look at those goals that we've set out for ourselves and decide if they're still the goals that we really want to achieve.
So what are some big goals for you? Is it that you want to make sure that you're making the right decisions with your money? Maybe you've never worked with someone to have a financial plan. And you're like, gosh, April, I got a lot going on, and I just don't know where to start. Well, then my recommendation would be that we need a financial plan, we need to figure out what are those goals that you have? What are your opportunities, what challenges are in your way? We need a roadmap, right?
So if we know where we're going in the future, because we know what our goals are, and then we know where we are today, are those two things in alignment? So you need a financial plan that's going to help you achieve these goals. And just know it's going to change. And that's okay. But let's go ahead and get a baseline for you so that it's easier to make those adjustments. One of my clients recently was planning, when I first met with her, she was planning to retire in 2025. That's a little less than two years from now. So we're putting in this plan for her to retire in June of 2025.
Well, when we met recently, she's decided she wants to work a few more years and would rather retire in 2027, or 2028. And if you are in this, if you're in the state of Florida retirement plan, this client was in the DROP program. And the state of Florida just made changes in 2023, where you could extend your DROP from five years to eight. And this is something that we looked at together with her to say, hey, does this make sense for her to do? Should she still retire in 2025 or should she extend her job for this now the full eight years, and retire in 2028.
So things change. But let's go ahead and get a baseline so that you can make those changes and those adjustments as needed. Now, the new year might bring with it its own set of challenges. So let's acknowledge them. Whether it's unexpected expenses, changes in income, there are definitely some challenges that can arise. But you know what, let's tackle them head on. One of the mistakes I see people make is that we don't address them.
That we're too fearful of what the numbers may say. And what they may show us. Maybe they show that we're too far behind. Maybe they show us that we're not ready to retire yet. Whatever that fear is, it's bubbling up for you. But isn't it better to take a look at it? Isn't it better to shine some light on it and to know where you are today, to know what adjustments, what tweaks are needed to help get you there faster? Isn't it better that we just tackle that head on instead of just putting our head in the sand?
Challenges can also be opportunities in disguise, right? So when we're thinking about overcoming these financial hurdles, how do we take these challenges, and how do we turn them into stepping stones towards your goals? Sometimes we've gotta regroup. And that's okay. Sometimes, like a client of mine, we look at it, we say, hey, you know what, you're actually ahead of schedule. You're not just on track, but you're ahead of schedule to reach your goals. How fun is that? So the problem is, if we don't stop to look at it, we don't know. We don't know if we're behind, if we're on schedule, or if we're ahead of schedule.
So I would love to hear from you guys. What are your financial intentions? What are your financial goals for the new year? I don't care if it's a big dream, or you feel like it's something small, a small win, we would love to celebrate with you. And let us know as we're going into this new year, are there some specific questions that you want us to tackle? You can send us an email and let us know, or you can send us a message through social media, and let us know if there's a specific question or a topic you'd love for us to tackle in the new year.
So as we're kind of getting ready to go into 2024, I just want to recap for you some of the things that I recommend that you look at. Let's look at our spending plan for 2024 and make sure that we're in good order there and make sure that we're making any tweaks or adjustments that we need. So we want to look at our spending plan. Then we want to look at is our emergency fund fully funded? If we have debt, we want to have a plan for how to pay that debt down efficiently and effectively. We want to look at our savings plan and our savings goals, we want to make sure that we're investing appropriately for our goals. And we want to review and adjust our goals for not only this year, but also think about in the near term, the near future as well, thinking kind of more about those bigger goals that we may have.
And these are all just steps towards a brighter financial future. These are just some key things to think about as we're setting up our financial resolutions for the new year. So I'd love for you now to take some of these items that we've discussed, set those intentions, refresh those goals and really get a good game plan for how you're going to tackle those into the new year. And you know, as we wrap up here, just as always, I want to say thank you for your continued support and being part of this podcast community. And I'm really just wishing you guys a happy new year. And here's to a year of happiness and health, and a prosperous new year for each and every one of you.
Voiceover: This material is intended for general public use. By providing this content, Park Avenue Securities, LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoenfinancial.com. Or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities, LLC. Address 3664 Coolidge Court, Tallahassee, Florida. Zip code 32311. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.
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